Nike Kicks Turnaround Timeline Down the Road -- WSJ

Dow Jones06-29

By Dean Seal

Nikes weak revenue performance and latest guidance cut is scaring away bullish analysts who fear a turnaround could be at least a year away.

The shoes and sportswear maker said late Thursday it now expects sales to decline in the fiscal year that started this month. Consumer spending remains stubbornly tight and Nike is trying to regain ground lost to competitors in the critical running category.

The stock tanked following the lowered outlook, and a miss in quarterly revenue.

Several once-bullish analysts moved to downgrade the stock's rating. UBS analysts did so Friday, saying the results indicate fundamental trends are worse than they previously thought.

We believe Nike is embarking on what will be a multiyear reset of its business in order to return to healthy top-line growth rates, they said in a research note.

A turnaround requires pushing hard into the kind of product innovation Nike has lacked in recent years, several analysts said.

Even analysts who kept "buy" ratings sounded a note of caution. Wedbush analysts said Friday they still believe Nike will get it together eventually, but expect shares to stay in the proverbial penalty box until management regains some investor trust.

Nikes new view:

-- It expects revenue to drop by a mid-single digit percentage for the fiscal year that ends next May.

-- It now expects first-quarter revenue to drop about 10%. Analysts polled by FactSet had expected just a 2.8% decline.

Dig into the last quarter's results here.

This item is part of a Wall Street Journal live coverage event. The full stream can be found by searching P/WSJL (WSJ Live Coverage).

(END) Dow Jones Newswires

June 28, 2024 12:45 ET (16:45 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.

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